Hi Mirick, welcome to Dawn of Fantasy.
To follow up on your second question - "what is the incentive to spending resources on building a large army if the scale of the battle"
First of all it`s fun to have epic scale battle. But mainly - the rewards (even if you loose the match) scale up accordingly. And since PvP is the best way to gain Influence resource, it`s really beneficial to have large battle. For example - small PvP match can get you 4/8 Influence points for loosing/winning. And the large one can bring up to 48 Influence points for winning. This Influence can then be spent for getting some awesome upgrades for your town - like stone walls, or purchasing additional heroes or special units like Dragons.